One in three of the 159 equity and fixed income analysts from around Fidelity’s global operation surveyed, found company management teams more confident than they were 12 months ago, but this jumps to 50% in Japan and 42% in Europe.
According to the survey’s authors, while the US recovery is levelling off, the European recovery is predicted to gather steam on the back of “corporate renewal and recovering demand”.
But, it adds: “Somewhat surprisingly however, Japan tops our aggregated sentiment indicator, ahead of Europe and the US. ‘Abenomics’ is seen feeding through in stronger management confidence and capex plans and, crucially, wage growth is expected to come through, while the outlook for dividends is excellent.”
It added: “Japan stands out as the strongest region overall and bucks the trend in a number of areas in the survey, and the results suggest that for the time being at least Japanese companies are giving the ‘Abenomics’ reform programme the benefit of the doubt. Key findings that bode well for Prime Minister Shinz Abe’s ‘third arrow’ include Japan’s strong performance on management confidence compared to last year and the significant improvement in expected returns on equity.”
At the other end of the spectrum, caution resonates across the various metrics when applied to China, the survey shows.
“Our analysts report that demand indicators are softening and cost-cutting is now a common driver of earnings growth. Rising competitive pressures are evident in many of the survey’s indicators. In fact, the survey reveals general softness across all emerging markets; however, this masks considerable divergence within this category as lower oil prices and differing reform commitments create well-defined winners and losers.”
